On May 23rd, 1889, the trial of the Electric Sugar Refinery miscreants began in a Manhattan courtroom. All of the defendants were there; Olive E. Friend, Rev. William Howard and his wife Emily, as well as two brothers, George and Orrin Halstead, who were arrested in Michigan.
Assistant District Attorney Davis had them all gathered, but this was the trial of William Howard only. He was seen as the head conspirator, after the now deceased Professor Friend, Olive’s husband.
They were on trial for a massive operation of fraud, larceny and deception all originating from the acceptance of investment money for an enterprise called the Electric Sugar Refining Company.
The New York and London stock markets had been abuzz for over a year over Professor Friend’s claim of inventing a new process of converting raw sugar into refined sugar through the use of his secret formula involving the use of electricity.
Had it worked, the process would have cut the time consuming and difficult process of refining sugar down to hours from days, saving refiners a boatload of money in processing and worker’s costs. Had it worked, it would have made its inventor and his board of directors filthy rich.
The company would have also made the initial investors and stockholders quite wealthy too. But then the Professor died in 1888, and the whole thing fell apart, and was exposed as a massive fraud and a swindle that would make any grifter proud. For more details on the whole story, please read Part One, Part Two and Part Three.
All of the defendants sat in the courtroom that day. Olive Friend, the wife of the deceased Professor, was much younger than her husband had been, and was a plump woman who said she suffered from heart palpitations.
She sat in the courtroom in black silk widow’s weeds with diamond earrings glittering from her ears. Also at the table, the defendant William Howard, Olive’s step-father, sat with his arm propped up on the table, his hand cupped around his ear so he could catch every word of testimony.
Still dressed in his clerical collar and suit, he looked like a fierce Calvinist elder, despite his years, still ready to go forth in the ultimate battle for his freedom.
The District Attorney called as his first witness the President of the Electric Sugar Refining Company, Henry Cotterill. He took the stand, and with remarkable frankness, told the court how he had been taken in by the Friends and the Howards.
He said that he had heard about the professor’s invention in 1888, and thought it was intriguing. He arranged to meet with the professor at the defendants’ apartment on East 73rd Street.
There, the professor told him that he had invented a formula that would refine sugar in an entirely new way, enabling him to make refined sugar at forty cents a ton. If he was able to go into wholesale production, he would be able to refine 4,000 barrels a day, netting them a profit of $8.00 a barrel.
The going profit of everyone else’s sugar was $.75 a barrel. The math was staggering! The professor had examples of his refined sugar on the table, and the piles of finely powdered white gold were the most beautiful thing Cotterill had ever seen.
Over the next few months, Cotterill came back to the apartment many times, often bringing other potential investors with him. They talked about how they would structure a corporation, and how they would divide the stock.
During this time, Cotterill testified, Olive and Howard were always there, and were a part of every demonstration and discussion. Everyone wanted to see the formula at work, and the machine that refined the sugar in action, but the defendants always told them it was a secret.
They would take samples out of a locked room, and once the investors were allowed to peek into the room, where they saw an object on a table covered with a cloth. They never saw a machine, or sugar being refined. They all took it on faith. While Cotterill testified, Olive sat there looking bored.
Over the next few days, Cotterill finished up his testimony and was cross-examined. He told more stories about the demonstrations. He said that once he had gone to the professor’s apartment with a big time English investor.
The professor had shown them a weighed barrel of raw sugar. He took it back into the processing room, and they heard machinery noises and smelled chemicals and sugar.
The professor came back out, and they talked. Two hours later, the noises had stopped, and the professor went into the room and came out with a barrel of refined sugar. The British investor tasted the sugar and was amazed at the purity. He wrote a check and took samples back to England to show to other investors.
Cotterill described how excited he was to made president of the company, after investing heavily himself, and going back home to England and persuading investors there to get in on this marvelous venture.
He told the court how British investors pressed him for information on how the whole thing worked, and how he had told them he had faith in the professor, as he had seen the results himself. He wired enough money back to NY that the professor was able to buy the factory building in Red Hook, and start furnishing the factory.
The professor wrote to him and his English investors, and told them that he was the only person who knew the formula to use electricity to refine sugar, and the only one who could operate the machinery at that time. If anyone had any doubts of his process, the factory would soon be up and running and the world would then know. Cotterill read this telegram aloud to the court.
The next witness was the Secretary-Treasurer of the company, Mr. Robertson. He told basically the same story, but his had a religious side.
He had sold the idea of the company to his British church members, and against their general policies of getting too involved in worldly affairs, the Christadelphians had invested heavily. Even the poorest members had offered their pennies to get in on this blessing.
Robinson also testified as to how much money was on the books, and how much had been paid for factory expenses, and other business expenses. When asked if he had any idea that the whole thing was a scam, he tearfully said that he did not.
William Howard finally took the stand. The trial had been a long one, but this was the witness that everyone had been waiting for. He told the court that the entire swindle had been the idea of Professor Friend and William Cotterill.
He described Cotterill as “the sharpest, shrewdest rascal that ever left England.” He admitted that his son-in-law was a fraud, although perhaps he really had invented a formula for refining sugar. At any rate, that’s not what was going on in the factory.
He said that Friend and Cotterill had devised the means to con investors, and once they got going, he had no choice but to go along with it in order to protect his daughter.
He told the court that once they had the Red Hook factory, they were really able to take in investors. He and the professor put together the machine. When would be investors insisted on seeing the process work, they would take them to the locked room on the top floor of the building.
The raw sugar would be poured into the front of the machine, and it would be turned on. Unbeknownst to the investors, the sugar would run down a pipe that dumped the sugar into the bay. Who knows how much sugar had been poured into the water, it was a lot.
Pure refined sugar that they had purchased from a refinery was packed into the other side of the machine, and after the “process” had been completed, they simply spooned it out into the investor’s hands. Greed took care of the rest.
The professor’s sudden death had ruined everything, and although the family and Cotterill had tried to make it work, the operation had come to a disastrous ruin. But it was Friend and Cotterill, not the Howards and Olive, who were really guilty here. He, Howard, was just an itinerant preacher who had been caught up in Satan’s schemes, and he had fallen. He was weak, but not a criminal.
The jury didn’t buy it. They found William Howard guilty, and he was sentenced to hard labor at Sing Sing Prison for a term of nine years and eight months.
Soon afterwards, Olive Friend, Emily Howard and the two Halstead brothers pleaded guilty. The Halstead boys had only participated in the scam after the fact and not until the Howard’s and Olive had fled to Michigan. They were never the focus of the investigation, and were released.
The public wanted the prosecutors to throw the book at the women, especially Olive, but it didn’t happen. The prosecutor told the press that in his opinion, they were as guilty as Howard, but they had not been the instigators of the fraud, only participants under the influence of their husbands.
Yes, they had certainly been beneficiaries of the ill-gotten gains, but he didn’t feel it was worth it to spend the people’s money to prosecute them further. They had both been in prison for sixteen months.
The fallout continued. All of the ESRC assets were seized and sold to pay back investors. The factory building was sold, as were the contents, which included a dynamo and some mysterious machinery.
A State Supreme Court judge gave the receiver for the company, R. Burnham Moffitt, permission to sue Olive Friend, the Howards and the Hallstead’s, in order to recover money for investors. Olive was sued in Michigan as well, where she took the stand and testified that the scheme had been orchestrated by William Cotterill. The papers do not tell the outcome of the case.
No doubt Cotterill was sued by a lot of people, and probably Robertson, as well. The latter probably was not able to show his face around the Christadelphians for quite a while, if ever.
Although some funds were recovered, they probably went to those who could most afford to lose a few dollars or pounds. It’s very doubtful that the poor English church members, or small American and British investors ever saw a penny returned to them.
As for William Howard, a reporter visited him in prison, while doing a piece for the New York Press on famous prisoners in Sing Sing. He described William Howard as a “wizened old fellow with an unctuousness that makes him out of the ordinary.”
The reporter wrote that Howard was partially deaf and sickly. He was supposed to be working in the sewing shop, and was very lax and unenthusiastic about his tasks. “He nibbles at the cloth with his shears.” Howard had only been in prison for several months when the article was written.
He was certainly not enjoying it, and the paper reported that he and another famous swindler did not like each other, and wanted to be kept from each other’s presence. The Howards and the Friends were never heard of again.
(Photo:Office and cell block, Sing Sing Prison, Ossining, NY. Wikipedia)